This excerpt taken from the GM DEF 14A filed Apr 27, 2007.
Approval of the 2007 Annual Incentive Plan
The General Motors 2002 Annual Incentive Plan, which is administered by the Executive Compensation Committee (the “Committee”), is scheduled to terminate on May 31, 2007.
The Board of Directors believes that the Corporation’s continued ability to attract, motivate, and retain highly qualified employees will have a direct impact on the future success and profitability of the Corporation. To that end, the incentive plans provide the Corporation with the ability to maintain competitive pay practices. The Corporation’s executive compensation program is designed so that a meaningful portion of each executive’s total compensation opportunity is placed at-risk through awards made under the incentive plans. The final value of such awards is tied to the achievement of specific financial, operational, and individual goals, and the degree to which value is created for stockholders.
As discussed in “Compensation Discussion and Analysis” on page 21, the 2007 Plan has been designed to meet the requirements of Section 162(m) of the IRC for “qualified performance-based” compensation. Consistent with the Committee’s compensation deductibility policy, in the future, the Corporation plans to seek stockholder approval where necessary to comply with appropriate rules and/or regulations.
The Plan document is attached as Exhibit B, and the Plan description set forth below is qualified in its entirety by the complete Plan documents.